The Australian Federal Government has recently upped its housing construction ante in an attempt to expand the supply and increase affordability. The news, announced by Prime Minister Anthony Albanese, is a testament to the government’s commitment to addressing the challenges faced by potential homeowners and renters in accessing affordable housing.
A New Benchmark in Housing Construction
In a decision made following a meeting with the National Cabinet, Prime Minister Anthony Albanese declared a significant increase in the national accommodation construction target. This revision stipulates the creation of 1.2 million well-situated brand-new homes over the next five years, commencing on 1 July 2024. This is a notable increase from the earlier aim of constructing 1 million homes, a resolution announced in the previous year.
Distribution of Construction Responsibility
An interesting facet of this housing strategy is that the Federal Government will directly oversee the construction of only 10,000 of these dwellings. The responsibility for the vast majority of these new homes falls on the private sector, while some will also be undertaken by state and territory governments.
As an incentive for meeting and exceeding these construction goals, the Federal Government has introduced a $3 billion performance-based funding initiative. This is designed to reward states and territories that not only achieve their targets but also implement reforms to stimulate the housing supply.
Stimulating Housing Supply
In a move to further galvanise housing creation, the government has additionally announced an injection of $500 million. This competitive funding package is designed to prompt state and local governments to kickstart the production of new housing stock.
The Implication on Housing Prices
The fundamental economic principle of supply and demand suggests that an increase in the supply of housing should cause a decrease in demand, which in turn should put downward pressure on property prices. This entire endeavour is fundamentally aimed at making housing more affordable, which has become an increasingly prominent issue as prices continue to rise. The government’s plan, by encouraging a higher volume of available homes, should help ease the financial strain many potential homeowners and renters face when looking for affordable housing.
The announcement by Prime Minister Anthony Albanese signals a hopeful and forward-thinking step in addressing Australia’s housing affordability challenge. Contact us at Peel Finance Brokers to consider your home loan options today.
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Dip. of Management (Deacon University)
Dip. of Finance/Mortgage Broking Mgt.
Assoc. Cert. of Business (Real Estate)
Assoc. of Mort. Ind. Assoc. of Aust. (AMIAA)
Terry Boag is the founder and CEO of Peel Finance Brokers and has been providing professional and loyal service to the Mandurah and southwest area for 25 years. With a long history of financial experience, Terry is reliable and dedicated to his clients, always ensuring the highest customer service and delivering strong lender relationships.